Two Silicon Valley Venture Capital Funds with deep ties to China - Walden International and NEA relationship: Telegent Systems and Spreadtrum
In 2008 a Nasdaq-publicly traded company called SiRF was sued by its shareholders. The Company’s CFO was prominently named in the suits. The company’s profit’s declined by 98% and the stock price tanked rapdily. The company’s management was accused of providing false and misleading statements about its business and prospects.
Prior to the financial and stock melt down of SiRF in February 2008 and the substantial loss to common shareholders SiRF purchased in July 2007 a company called Centrality. At the time it looked simply like a very bad business decision. However, reviewing the facts today and the VC firms involved in this debacle, it provides an interesting insight to how these two VC firms may have been dealing with inside information and unfair advantages with regards to the common stockholders.
Centrality’s major investor was Walden International, controlled by Silicon Valley financier Lip-bu Tan. On the Sirf Board of Directors was a principle representing New Enterprises Associate (NEA). Both have the largest China investment venture funds of the top 5 Silicon Valley VC firms, Northern Light and Sina.
In hind sight, the technology of Centrality was going obsolete. The major investors in Centrality knew this and recognized that the potential for a successful IPO had passed. The problem then was: how to extract the investors capital in this soon to be obsolete company.
The solution seems to be clear today: To sell the company to a public company and for a enough cash that would return the VC capital and perhaps a large profit at the same time for the investors. Getting the cash was the key to the whole deal because they knew that the technology was going obsolete.
NEA principles were on the Board of Directors of SiRF. SiRF purchased Centrality for about $283 million dollars in July 2007. About $100 million of this was in cash, representing at the time a substantial percentage of SiRF assets. This was what was needed to extract Walden International and other smaller VC’s cash investments and provide a excellent return to the investors in Walden International. Walden and NEA both knew that this technology and the company itself was becoming obsolete. Centrality’s acquisition resulted in the complete collapse of SiRF.
However the transaction viewed as a single separate event may be dismissed as just a stroke of very bad luck. Until you know about a new start up company called Telegent Systems and the most recent rumor coming out of China that Spreadtrum (NasDAQ:SPRD) is currently in the process of buying Telegent Systems.
Until May 2010, Telegent was a high flying semiconductor company with a single successful chip that allowed cell phones to receive analogue television reception. The company reported revenues of over $100 million and was planning a significant IPO for approximately $280 million, as reported in the documents filed with the SEC in January 2010. Until things started to fall apart. Telegent would eventually claim that economic conditions were not right for them to go public at that time and the IPO was cancelled around March 2010.
In reality information derived from sources in China, the fad for Telegent’s chip and technology was disappearing, lack of internal controls in the china operation lead to significant disclosure issues and the introduction of the first competitiors resulted in the cancellation of the IPO and significant drop in Revenue and margins. A major layoff occurred in July of 2010 and a new CEO was hired to restructure the company, albeit for the purpose of a sale.
The investors in this company with almost all of the cash infusion ( approx $25 million ea.) is from Walden International and NEA. The CFO from SiRF was also brought in as the CFO of Telegent. Telegent’s Chairman of the board is Lip-Bu Tan.
It appears that we see the same situation with Telegent that existed with Centrality. Only this time both Walden and NEA have the problem of extracting the investors money from a company whose technology is obsolete. The people we have spoken to indicate that the analog technology is well over three years old and the revenues in Telegent are substantially lower than what was published in the initial S-1 filings and are in fact in the red. This is substantiated through discussions with individuals in China.
Telegent needs an angel similar to what SiRF was for Centrality. Coincidentally NEA has a significant control over Spreadtrum. An NEA principle is on the Board of Directors and NEA was a significant investor in SPRD.
We have heard and believe that Spreadtrum is going to purchase Telegent systems. Most likely in a similar deal as Centrality and SiRF. Freeing up the cash that NEA and Walden have invested in Telegent along with a nice return for NEA and Walden investors. All to the detriment of Spreadtrum investors holding ADR shares.
We do not believe that this transaction is in the best interest of the individuals and institutions that hold ADR stock shares in Spreadtrum. In fact, with NEA involvement including influence on Spreadtrum’s board of directors and the fact that they each have approximately $25 million invested in Telegent we believe that this deal because of the relationship of the two VC firms efforts to free up this investment and should not be allowed to occur. Both firms know that the technology and the business of Telegent Systems is obsolete.
This scenario appears to be the process that Walden and NEA are using to extract investor money from business investments that do not blossom into successful IPO’s. They find a public company and extract the cash and a profit while the holders of common in the public company are left with a severely damaged public company. As a result, Walden and NEA are able to almost guarantee their investors almost no risk.
Factual Data - Telegent acquired by Spreadtrum – Significant similarities with Sirf acquiring Centrality in 2007: Same investors, same playbook. Sirf crashed in 2008. A cautionary tale for Spreadtrum common stockholders ?
• December 2009 – Telegent files for $250m IPO
http://venturebeat.com/2009/11/24/telegent-files-for-ipo-as-public-market-thaws-even-more/
• May 2010 – Telegent discretely withdraws IPO
http://venturebeat.com/2010/05/06/amid-market-slump-telegent-cancels-ipo-and-starts-search-for-new-ceo/
• June 2011 – Telegent acquired by Spreadtrum
1. Spreadtrum and Telegent share the same board member, Scott Sandell from NEA
2. Spreadtrum is a major customer of Cadence Design Systems
3. Cadence CEO Lip-Bu Tan is chairman of the board of Telegent
4. Venture Capitalist Lip-Bu Tan is a major investor of Telegent via Walden International’s China fund Sina
5. NEA is a major investor of Telegent and Spreadtrum via Northern Light, NEA’s $100m+ China fund
6. Cadence CFO Geoff Ribar was CFO of Telegent until October 2010
• Estimated cash on hand for Telegent: $100m (Down from $150m in June 2010)
• Telegent technology assessment: obsolete, no new product pipeline, Analog Mobile TV designed out at most China OEM/ODM/IDHs
Similarities with SiRF acquires Centrality in 2007
• 2007: SiRF acquires Lip-Bu Tan-controlled Centrality for $280 million, SiRF stock price at $22
• SiRF VC investors are Walden (Lip-Bu Tan) and NEA (Scott Sandell)
• 2008: After SIRF CFO Ribar announces 98% revenue drop SiRF stock plunges to $7
Most notable was the impairment charges after the acquisition: Essentially Centrality was written off for goodwill of $216m plus another $43m in asset write downs right after the acquisition.
The Centrality acquisition constituted a large cash gift to Financier Lip-Bu Tan.
Meanwhile, investors saw the SiRF stock price go from $36.15/share to $0.94/share under SiRF CFO Ribar’s and BOD chairman Lip-Bu Tan watch.
http://mataharisprd.blogspot.com/
SPREADTRUM COMMUNICATIONS
SPREADTRUM COMMUNICATIONS SHANGHAI
SPRD
QUORUM
CHINA
http://mataharisprd.wordpress.com/2011/06/10/spreadtrum-analyst-warning-downgrade-sell/
http://www.spreadtrum.com/en/
Friday 10 June 2011
Sunday 5 June 2011
SPREADTRUM
SPREADTRUM ANALYST WARNING DOWNGRADE SELL
Two Silicon Valley Venture Capital Funds with deep ties to China - Walden International and NEA relationship: Telegent Systems and Spreadtrum
In 2008 a Nasdaq-publicly traded company called SiRF was sued by its shareholders. The Company’s CFO was prominently named in the suits. The company’s profit’s declined by 98% and the stock price tanked rapdily. The company’s management was accused of providing false and misleading statements about its business and prospects.
Prior to the financial and stock melt down of SiRF in February 2008 and the substantial loss to common shareholders SiRF purchased in July 2007 a company called Centrality. At the time it looked simply like a very bad business decision. However, reviewing the facts today and the VC firms involved in this debacle, it provides an interesting insight to how these two VC firms may have been dealing with inside information and unfair advantages with regards to the common stockholders.
Centrality’s major investor was Walden International, controlled by Silicon Valley financier Lip-bu Tan. On the Sirf Board of Directors was a principle representing New Enterprises Associate (NEA). Both have the largest China investment venture funds of the top 5 Silicon Valley VC firms, Northern Light and Sina.
In hind sight, the technology of Centrality was going obsolete. The major investors in Centrality knew this and recognized that the potential for a successful IPO had passed. The problem then was: how to extract the investors capital in this soon to be obsolete company.
The solution seems to be clear today: To sell the company to a public company and for a enough cash that would return the VC capital and perhaps a large profit at the same time for the investors. Getting the cash was the key to the whole deal because they knew that the technology was going obsolete.
NEA principles were on the Board of Directors of SiRF. SiRF purchased Centrality for about $283 million dollars in July 2007. About $100 million of this was in cash, representing at the time a substantial percentage of SiRF assets. This was what was needed to extract Walden International and other smaller VC’s cash investments and provide a excellent return to the investors in Walden International. Walden and NEA both knew that this technology and the company itself was becoming obsolete. Centrality’s acquisition resulted in the complete collapse of SiRF.
However the transaction viewed as a single separate event may be dismissed as just a stroke of very bad luck. Until you know about a new start up company called Telegent Systems and the most recent rumor coming out of China that Spreadtrum (NasDAQ:SPRD) is currently in the process of buying Telegent Systems.
Until May 2010, Telegent was a high flying semiconductor company with a single successful chip that allowed cell phones to receive analogue television reception. The company reported revenues of over $100 million and was planning a significant IPO for approximately $280 million, as reported in the documents filed with the SEC in January 2010. Until things started to fall apart. Telegent would eventually claim that economic conditions were not right for them to go public at that time and the IPO was cancelled around March 2010.
In reality information derived from sources in China, the fad for Telegent’s chip and technology was disappearing, lack of internal controls in the china operation lead to significant disclosure issues and the introduction of the first competitiors resulted in the cancellation of the IPO and significant drop in Revenue and margins. A major layoff occurred in July of 2010 and a new CEO was hired to restructure the company, albeit for the purpose of a sale.
The investors in this company with almost all of the cash infusion ( approx $25 million ea.) is from Walden International and NEA. The CFO from SiRF was also brought in as the CFO of Telegent. Telegent’s Chairman of the board is Lip-Bu Tan.
It appears that we see the same situation with Telegent that existed with Centrality. Only this time both Walden and NEA have the problem of extracting the investors money from a company whose technology is obsolete. The people we have spoken to indicate that the analog technology is well over three years old and the revenues in Telegent are substantially lower than what was published in the initial S-1 filings and are in fact in the red. This is substantiated through discussions with individuals in China.
Telegent needs an angel similar to what SiRF was for Centrality. Coincidentally NEA has a significant control over Spreadtrum. An NEA principle is on the Board of Directors and NEA was a significant investor in SPRD.
We have heard and believe that Spreadtrum is going to purchase Telegent systems. Most likely in a similar deal as Centrality and SiRF. Freeing up the cash that NEA and Walden have invested in Telegent along with a nice return for NEA and Walden investors. All to the detriment of Spreadtrum investors holding ADR shares.
We do not believe that this transaction is in the best interest of the individuals and institutions that hold ADR stock shares in Spreadtrum. In fact, with NEA involvement including influence on Spreadtrum’s board of directors and the fact that they each have approximately $25 million invested in Telegent we believe that this deal because of the relationship of the two VC firms efforts to free up this investment and should not be allowed to occur. Both firms know that the technology and the business of Telegent Systems is obsolete.
This scenario appears to be the process that Walden and NEA are using to extract investor money from business investments that do not blossom into successful IPO’s. They find a public company and extract the cash and a profit while the holders of common in the public company are left with a severely damaged public company. As a result, Walden and NEA are able to almost guarantee their investors almost no risk.
Factual Data - Telegent acquired by Spreadtrum – Significant similarities with Sirf acquiring Centrality in 2007: Same investors, same playbook. Sirf crashed in 2008. A cautionary tale for Spreadtrum common stockholders ?
• December 2009 – Telegent files for $250m IPO
http://venturebeat.com/2009/11/24/telegent-files-for-ipo-as-public-market-thaws-even-more/
• May 2010 – Telegent discretely withdraws IPO
http://venturebeat.com/2010/05/06/amid-market-slump-telegent-cancels-ipo-and-starts-search-for-new-ceo/
• June 2011 – Telegent acquired by Spreadtrum
1. Spreadtrum and Telegent share the same board member, Scott Sandell from NEA
2. Spreadtrum is a major customer of Cadence Design Systems
3. Cadence CEO Lip-Bu Tan is chairman of the board of Telegent
4. Venture Capitalist Lip-Bu Tan is a major investor of Telegent via Walden International’s China fund Sina
5. NEA is a major investor of Telegent and Spreadtrum via Northern Light, NEA’s $100m+ China fund
6. Cadence CFO Geoff Ribar was CFO of Telegent until October 2010
• Estimated cash on hand for Telegent: $100m (Down from $150m in June 2010)
• Telegent technology assessment: obsolete, no new product pipeline, Analog Mobile TV designed out at most China OEM/ODM/IDHs
Similarities with SiRF acquires Centrality in 2007
• 2007: SiRF acquires Lip-Bu Tan-controlled Centrality for $280 million, SiRF stock price at $22
• SiRF VC investors are Walden (Lip-Bu Tan) and NEA (Scott Sandell)
• 2008: After SIRF CFO Ribar announces 98% revenue drop SiRF stock plunges to $7
Most notable was the impairment charges after the acquisition: Essentially Centrality was written off for goodwill of $216m plus another $43m in asset write downs right after the acquisition.
The Centrality acquisition constituted a large cash gift to Financier Lip-Bu Tan.
Meanwhile, investors saw the SiRF stock price go from $36.15/share to $0.94/share under SiRF CFO Ribar’s and BOD chairman Lip-Bu Tan watch.
https://mataharisprd.wordpress.com/2011/06/05/spreadtrum/
http://mataharisprd.blogspot.com/2011/06/two-silicon-valley-venture-capital_04.html
http://mataharisprd.blogspot.com/2011/06/two-silicon-valley-venture-capital.html
http://uk.linkedin.com/pub/mata-hari/34/b77/7b0
@mataharisprd
Two Silicon Valley Venture Capital Funds with deep ties to China - Walden International and NEA relationship: Telegent Systems and Spreadtrum
In 2008 a Nasdaq-publicly traded company called SiRF was sued by its shareholders. The Company’s CFO was prominently named in the suits. The company’s profit’s declined by 98% and the stock price tanked rapdily. The company’s management was accused of providing false and misleading statements about its business and prospects.
Prior to the financial and stock melt down of SiRF in February 2008 and the substantial loss to common shareholders SiRF purchased in July 2007 a company called Centrality. At the time it looked simply like a very bad business decision. However, reviewing the facts today and the VC firms involved in this debacle, it provides an interesting insight to how these two VC firms may have been dealing with inside information and unfair advantages with regards to the common stockholders.
Centrality’s major investor was Walden International, controlled by Silicon Valley financier Lip-bu Tan. On the Sirf Board of Directors was a principle representing New Enterprises Associate (NEA). Both have the largest China investment venture funds of the top 5 Silicon Valley VC firms, Northern Light and Sina.
In hind sight, the technology of Centrality was going obsolete. The major investors in Centrality knew this and recognized that the potential for a successful IPO had passed. The problem then was: how to extract the investors capital in this soon to be obsolete company.
The solution seems to be clear today: To sell the company to a public company and for a enough cash that would return the VC capital and perhaps a large profit at the same time for the investors. Getting the cash was the key to the whole deal because they knew that the technology was going obsolete.
NEA principles were on the Board of Directors of SiRF. SiRF purchased Centrality for about $283 million dollars in July 2007. About $100 million of this was in cash, representing at the time a substantial percentage of SiRF assets. This was what was needed to extract Walden International and other smaller VC’s cash investments and provide a excellent return to the investors in Walden International. Walden and NEA both knew that this technology and the company itself was becoming obsolete. Centrality’s acquisition resulted in the complete collapse of SiRF.
However the transaction viewed as a single separate event may be dismissed as just a stroke of very bad luck. Until you know about a new start up company called Telegent Systems and the most recent rumor coming out of China that Spreadtrum (NasDAQ:SPRD) is currently in the process of buying Telegent Systems.
Until May 2010, Telegent was a high flying semiconductor company with a single successful chip that allowed cell phones to receive analogue television reception. The company reported revenues of over $100 million and was planning a significant IPO for approximately $280 million, as reported in the documents filed with the SEC in January 2010. Until things started to fall apart. Telegent would eventually claim that economic conditions were not right for them to go public at that time and the IPO was cancelled around March 2010.
In reality information derived from sources in China, the fad for Telegent’s chip and technology was disappearing, lack of internal controls in the china operation lead to significant disclosure issues and the introduction of the first competitiors resulted in the cancellation of the IPO and significant drop in Revenue and margins. A major layoff occurred in July of 2010 and a new CEO was hired to restructure the company, albeit for the purpose of a sale.
The investors in this company with almost all of the cash infusion ( approx $25 million ea.) is from Walden International and NEA. The CFO from SiRF was also brought in as the CFO of Telegent. Telegent’s Chairman of the board is Lip-Bu Tan.
It appears that we see the same situation with Telegent that existed with Centrality. Only this time both Walden and NEA have the problem of extracting the investors money from a company whose technology is obsolete. The people we have spoken to indicate that the analog technology is well over three years old and the revenues in Telegent are substantially lower than what was published in the initial S-1 filings and are in fact in the red. This is substantiated through discussions with individuals in China.
Telegent needs an angel similar to what SiRF was for Centrality. Coincidentally NEA has a significant control over Spreadtrum. An NEA principle is on the Board of Directors and NEA was a significant investor in SPRD.
We have heard and believe that Spreadtrum is going to purchase Telegent systems. Most likely in a similar deal as Centrality and SiRF. Freeing up the cash that NEA and Walden have invested in Telegent along with a nice return for NEA and Walden investors. All to the detriment of Spreadtrum investors holding ADR shares.
We do not believe that this transaction is in the best interest of the individuals and institutions that hold ADR stock shares in Spreadtrum. In fact, with NEA involvement including influence on Spreadtrum’s board of directors and the fact that they each have approximately $25 million invested in Telegent we believe that this deal because of the relationship of the two VC firms efforts to free up this investment and should not be allowed to occur. Both firms know that the technology and the business of Telegent Systems is obsolete.
This scenario appears to be the process that Walden and NEA are using to extract investor money from business investments that do not blossom into successful IPO’s. They find a public company and extract the cash and a profit while the holders of common in the public company are left with a severely damaged public company. As a result, Walden and NEA are able to almost guarantee their investors almost no risk.
Factual Data - Telegent acquired by Spreadtrum – Significant similarities with Sirf acquiring Centrality in 2007: Same investors, same playbook. Sirf crashed in 2008. A cautionary tale for Spreadtrum common stockholders ?
• December 2009 – Telegent files for $250m IPO
http://venturebeat.com/2009/11/24/telegent-files-for-ipo-as-public-market-thaws-even-more/
• May 2010 – Telegent discretely withdraws IPO
http://venturebeat.com/2010/05/06/amid-market-slump-telegent-cancels-ipo-and-starts-search-for-new-ceo/
• June 2011 – Telegent acquired by Spreadtrum
1. Spreadtrum and Telegent share the same board member, Scott Sandell from NEA
2. Spreadtrum is a major customer of Cadence Design Systems
3. Cadence CEO Lip-Bu Tan is chairman of the board of Telegent
4. Venture Capitalist Lip-Bu Tan is a major investor of Telegent via Walden International’s China fund Sina
5. NEA is a major investor of Telegent and Spreadtrum via Northern Light, NEA’s $100m+ China fund
6. Cadence CFO Geoff Ribar was CFO of Telegent until October 2010
• Estimated cash on hand for Telegent: $100m (Down from $150m in June 2010)
• Telegent technology assessment: obsolete, no new product pipeline, Analog Mobile TV designed out at most China OEM/ODM/IDHs
Similarities with SiRF acquires Centrality in 2007
• 2007: SiRF acquires Lip-Bu Tan-controlled Centrality for $280 million, SiRF stock price at $22
• SiRF VC investors are Walden (Lip-Bu Tan) and NEA (Scott Sandell)
• 2008: After SIRF CFO Ribar announces 98% revenue drop SiRF stock plunges to $7
Most notable was the impairment charges after the acquisition: Essentially Centrality was written off for goodwill of $216m plus another $43m in asset write downs right after the acquisition.
The Centrality acquisition constituted a large cash gift to Financier Lip-Bu Tan.
Meanwhile, investors saw the SiRF stock price go from $36.15/share to $0.94/share under SiRF CFO Ribar’s and BOD chairman Lip-Bu Tan watch.
https://mataharisprd.wordpress.com/2011/06/05/spreadtrum/
http://mataharisprd.blogspot.com/2011/06/two-silicon-valley-venture-capital_04.html
http://mataharisprd.blogspot.com/2011/06/two-silicon-valley-venture-capital.html
http://uk.linkedin.com/pub/mata-hari/34/b77/7b0
@mataharisprd
Saturday 4 June 2011
Two Silicon Valley Venture Capital Funds with deep ties to China - Walden International and NEA relationship: Telegent Systems and Spreadtrum
Two Silicon Valley Venture Capital Funds with deep ties to China - Walden International and NEA relationship: Telegent Systems and Spreadtrum
In 2008 a Nasdaq-publicly traded company called SiRF was sued by its shareholders. The Company’s CFO was prominently named in the suits. The company’s profit’s declined by 98% and the stock price tanked rapdily. The company’s management was accused of providing false and misleading statements about its business and prospects.
Prior to the financial and stock melt down of SiRF in February 2008 and the substantial loss to common shareholders SiRF purchased in July 2007 a company called Centrality. At the time it looked simply like a very bad business decision. However, reviewing the facts today and the VC firms involved in this debacle, it provides an interesting insight to how these two VC firms may have been dealing with inside information and unfair advantages with regards to the common stockholders.
Centrality’s major investor was Walden International, controlled by Silicon Valley financier Lip-bu Tan. On the Sirf Board of Directors was a principle representing New Enterprises Associate (NEA). Both have the largest China investment venture funds of the top 5 Silicon Valley VC firms, Northern Light and Sina.
In hind sight, the technology of Centrality was going obsolete. The major investors in Centrality knew this and recognized that the potential for a successful IPO had passed. The problem then was: how to extract the investors capital in this soon to be obsolete company.
The solution seems to be clear today: To sell the company to a public company and for a enough cash that would return the VC capital and perhaps a large profit at the same time for the investors. Getting the cash was the key to the whole deal because they knew that the technology was going obsolete.
NEA principles were on the Board of Directors of SiRF. SiRF purchased Centrality for about $283 million dollars in July 2007. About $100 million of this was in cash, representing at the time a substantial percentage of SiRF assets. This was what was needed to extract Walden International and other smaller VC’s cash investments and provide a excellent return to the investors in Walden International. Walden and NEA both knew that this technology and the company itself was becoming obsolete. Centrality’s acquisition resulted in the complete collapse of SiRF.
However the transaction viewed as a single separate event may be dismissed as just a stroke of very bad luck. Until you know about a new start up company called Telegent Systems and the most recent rumor coming out of China that Spreadtrum (NasDAQ:SPRD) is currently in the process of buying Telegent Systems.
Until May 2010, Telegent was a high flying semiconductor company with a single successful chip that allowed cell phones to receive analogue television reception. The company reported revenues of over $100 million and was planning a significant IPO for approximately $280 million, as reported in the documents filed with the SEC in January 2010. Until things started to fall apart. Telegent would eventually claim that economic conditions were not right for them to go public at that time and the IPO was cancelled around March 2010.
In reality information derived from sources in China, the fad for Telegent’s chip and technology was disappearing, lack of internal controls in the china operation lead to significant disclosure issues and the introduction of the first competitiors resulted in the cancellation of the IPO and significant drop in Revenue and margins. A major layoff occurred in July of 2010 and a new CEO was hired to restructure the company, albeit for the purpose of a sale.
The investors in this company with almost all of the cash infusion ( approx $25 million ea.) is from Walden International and NEA. The CFO from SiRF was also brought in as the CFO of Telegent. Telegent’s Chairman of the board is Lip-Bu Tan.
It appears that we see the same situation with Telegent that existed with Centrality. Only this time both Walden and NEA have the problem of extracting the investors money from a company whose technology is obsolete. The people we have spoken to indicate that the analog technology is well over three years old and the revenues in Telegent are substantially lower than what was published in the initial S-1 filings and are in fact in the red. This is substantiated through discussions with individuals in China.
Telegent needs an angel similar to what SiRF was for Centrality. Coincidentally NEA has a significant control over Spreadtrum. An NEA principle is on the Board of Directors and NEA was a significant investor in SPRD.
We have heard and believe that Spreadtrum is going to purchase Telegent systems. Most likely in a similar deal as Centrality and SiRF. Freeing up the cash that NEA and Walden have invested in Telegent along with a nice return for NEA and Walden investors. All to the detriment of Spreadtrum investors holding ADR shares.
We do not believe that this transaction is in the best interest of the individuals and institutions that hold ADR stock shares in Spreadtrum. In fact, with NEA involvement including influence on Spreadtrum’s board of directors and the fact that they each have approximately $25 million invested in Telegent we believe that this deal because of the relationship of the two VC firms efforts to free up this investment and should not be allowed to occur. Both firms know that the technology and the business of Telegent Systems is obsolete.
This scenario appears to be the process that Walden and NEA are using to extract investor money from business investments that do not blossom into successful IPO’s. They find a public company and extract the cash and a profit while the holders of common in the public company are left with a severely damaged public company. As a result, Walden and NEA are able to almost guarantee their investors almost no risk.
Factual Data - Telegent acquired by Spreadtrum – Significant similarities with Sirf acquiring Centrality in 2007: Same investors, same playbook. Sirf crashed in 2008. A cautionary tale for Spreadtrum common stockholders ?
• December 2009 – Telegent files for $250m IPO
http://venturebeat.com/2009/11/24/telegent-files-for-ipo-as-public-market-thaws-even-more/
• May 2010 – Telegent discretely withdraws IPO
http://venturebeat.com/2010/05/06/amid-market-slump-telegent-cancels-ipo-and-starts-search-for-new-ceo/
• June 2011 – Telegent acquired by Spreadtrum
1. Spreadtrum and Telegent share the same board member, Scott Sandell from NEA
2. Spreadtrum is a major customer of Cadence Design Systems
3. Cadence CEO Lip-Bu Tan is chairman of the board of Telegent
4. Venture Capitalist Lip-Bu Tan is a major investor of Telegent via Walden International’s China fund Sina
5. NEA is a major investor of Telegent and Spreadtrum via Northern Light, NEA’s $100m+ China fund
6. Cadence CFO Geoff Ribar was CFO of Telegent until October 2010
• Estimated cash on hand for Telegent: $100m (Down from $150m in June 2010)
• Telegent technology assessment: obsolete, no new product pipeline, Analog Mobile TV designed out at most China OEM/ODM/IDHs
Similarities with SiRF acquires Centrality in 2007
• 2007: SiRF acquires Lip-Bu Tan-controlled Centrality for $280 million, SiRF stock price at $22
• SiRF VC investors are Walden (Lip-Bu Tan) and NEA (Scott Sandell)
• 2008: After SIRF CFO Ribar announces 98% revenue drop SiRF stock plunges to $7
Most notable was the impairment charges after the acquisition: Essentially Centrality was written off for goodwill of $216m plus another $43m in asset write downs right after the acquisition.
The Centrality acquisition constituted a large cash gift to Financier Lip-Bu Tan.
Meanwhile, investors saw the SiRF stock price go from $36.15/share to $0.94/share under SiRF CFO Ribar’s and BOD chairman Lip-Bu Tan watch.
http://mataharisprd.wordpress.com/2011/06/04/two-silicon-valley-venture-capital-funds-with-deep-ties-to-china-walden-international-and-nea-relationship-telegent-systems-and-spreadtrum-2/
http://uk.linkedin.com/pub/mata-hari/34/b77/7b0
In 2008 a Nasdaq-publicly traded company called SiRF was sued by its shareholders. The Company’s CFO was prominently named in the suits. The company’s profit’s declined by 98% and the stock price tanked rapdily. The company’s management was accused of providing false and misleading statements about its business and prospects.
Prior to the financial and stock melt down of SiRF in February 2008 and the substantial loss to common shareholders SiRF purchased in July 2007 a company called Centrality. At the time it looked simply like a very bad business decision. However, reviewing the facts today and the VC firms involved in this debacle, it provides an interesting insight to how these two VC firms may have been dealing with inside information and unfair advantages with regards to the common stockholders.
Centrality’s major investor was Walden International, controlled by Silicon Valley financier Lip-bu Tan. On the Sirf Board of Directors was a principle representing New Enterprises Associate (NEA). Both have the largest China investment venture funds of the top 5 Silicon Valley VC firms, Northern Light and Sina.
In hind sight, the technology of Centrality was going obsolete. The major investors in Centrality knew this and recognized that the potential for a successful IPO had passed. The problem then was: how to extract the investors capital in this soon to be obsolete company.
The solution seems to be clear today: To sell the company to a public company and for a enough cash that would return the VC capital and perhaps a large profit at the same time for the investors. Getting the cash was the key to the whole deal because they knew that the technology was going obsolete.
NEA principles were on the Board of Directors of SiRF. SiRF purchased Centrality for about $283 million dollars in July 2007. About $100 million of this was in cash, representing at the time a substantial percentage of SiRF assets. This was what was needed to extract Walden International and other smaller VC’s cash investments and provide a excellent return to the investors in Walden International. Walden and NEA both knew that this technology and the company itself was becoming obsolete. Centrality’s acquisition resulted in the complete collapse of SiRF.
However the transaction viewed as a single separate event may be dismissed as just a stroke of very bad luck. Until you know about a new start up company called Telegent Systems and the most recent rumor coming out of China that Spreadtrum (NasDAQ:SPRD) is currently in the process of buying Telegent Systems.
Until May 2010, Telegent was a high flying semiconductor company with a single successful chip that allowed cell phones to receive analogue television reception. The company reported revenues of over $100 million and was planning a significant IPO for approximately $280 million, as reported in the documents filed with the SEC in January 2010. Until things started to fall apart. Telegent would eventually claim that economic conditions were not right for them to go public at that time and the IPO was cancelled around March 2010.
In reality information derived from sources in China, the fad for Telegent’s chip and technology was disappearing, lack of internal controls in the china operation lead to significant disclosure issues and the introduction of the first competitiors resulted in the cancellation of the IPO and significant drop in Revenue and margins. A major layoff occurred in July of 2010 and a new CEO was hired to restructure the company, albeit for the purpose of a sale.
The investors in this company with almost all of the cash infusion ( approx $25 million ea.) is from Walden International and NEA. The CFO from SiRF was also brought in as the CFO of Telegent. Telegent’s Chairman of the board is Lip-Bu Tan.
It appears that we see the same situation with Telegent that existed with Centrality. Only this time both Walden and NEA have the problem of extracting the investors money from a company whose technology is obsolete. The people we have spoken to indicate that the analog technology is well over three years old and the revenues in Telegent are substantially lower than what was published in the initial S-1 filings and are in fact in the red. This is substantiated through discussions with individuals in China.
Telegent needs an angel similar to what SiRF was for Centrality. Coincidentally NEA has a significant control over Spreadtrum. An NEA principle is on the Board of Directors and NEA was a significant investor in SPRD.
We have heard and believe that Spreadtrum is going to purchase Telegent systems. Most likely in a similar deal as Centrality and SiRF. Freeing up the cash that NEA and Walden have invested in Telegent along with a nice return for NEA and Walden investors. All to the detriment of Spreadtrum investors holding ADR shares.
We do not believe that this transaction is in the best interest of the individuals and institutions that hold ADR stock shares in Spreadtrum. In fact, with NEA involvement including influence on Spreadtrum’s board of directors and the fact that they each have approximately $25 million invested in Telegent we believe that this deal because of the relationship of the two VC firms efforts to free up this investment and should not be allowed to occur. Both firms know that the technology and the business of Telegent Systems is obsolete.
This scenario appears to be the process that Walden and NEA are using to extract investor money from business investments that do not blossom into successful IPO’s. They find a public company and extract the cash and a profit while the holders of common in the public company are left with a severely damaged public company. As a result, Walden and NEA are able to almost guarantee their investors almost no risk.
Factual Data - Telegent acquired by Spreadtrum – Significant similarities with Sirf acquiring Centrality in 2007: Same investors, same playbook. Sirf crashed in 2008. A cautionary tale for Spreadtrum common stockholders ?
• December 2009 – Telegent files for $250m IPO
http://venturebeat.com/2009/11/24/telegent-files-for-ipo-as-public-market-thaws-even-more/
• May 2010 – Telegent discretely withdraws IPO
http://venturebeat.com/2010/05/06/amid-market-slump-telegent-cancels-ipo-and-starts-search-for-new-ceo/
• June 2011 – Telegent acquired by Spreadtrum
1. Spreadtrum and Telegent share the same board member, Scott Sandell from NEA
2. Spreadtrum is a major customer of Cadence Design Systems
3. Cadence CEO Lip-Bu Tan is chairman of the board of Telegent
4. Venture Capitalist Lip-Bu Tan is a major investor of Telegent via Walden International’s China fund Sina
5. NEA is a major investor of Telegent and Spreadtrum via Northern Light, NEA’s $100m+ China fund
6. Cadence CFO Geoff Ribar was CFO of Telegent until October 2010
• Estimated cash on hand for Telegent: $100m (Down from $150m in June 2010)
• Telegent technology assessment: obsolete, no new product pipeline, Analog Mobile TV designed out at most China OEM/ODM/IDHs
Similarities with SiRF acquires Centrality in 2007
• 2007: SiRF acquires Lip-Bu Tan-controlled Centrality for $280 million, SiRF stock price at $22
• SiRF VC investors are Walden (Lip-Bu Tan) and NEA (Scott Sandell)
• 2008: After SIRF CFO Ribar announces 98% revenue drop SiRF stock plunges to $7
Most notable was the impairment charges after the acquisition: Essentially Centrality was written off for goodwill of $216m plus another $43m in asset write downs right after the acquisition.
The Centrality acquisition constituted a large cash gift to Financier Lip-Bu Tan.
Meanwhile, investors saw the SiRF stock price go from $36.15/share to $0.94/share under SiRF CFO Ribar’s and BOD chairman Lip-Bu Tan watch.
http://mataharisprd.wordpress.com/2011/06/04/two-silicon-valley-venture-capital-funds-with-deep-ties-to-china-walden-international-and-nea-relationship-telegent-systems-and-spreadtrum-2/
http://uk.linkedin.com/pub/mata-hari/34/b77/7b0
Two Silicon Valley Venture Capital Funds with deep ties to China - Walden International and NEA relationship: Telegent Systems and Spreadtrum
Two Silicon Valley Venture Capital Funds with deep ties to China - Walden International and NEA relationship: Telegent Systems and Spreadtrum
In 2008 a Nasdaq-publicly traded company called SiRF was sued by its shareholders. The Company’s CFO was prominently named in the suits. The company’s profit’s declined by 98% and the stock price tanked rapdily. The company’s management was accused of providing false and misleading statements about its business and prospects.
Prior to the financial and stock melt down of SiRF in February 2008 and the substantial loss to common shareholders SiRF purchased in July 2007 a company called Centrality. At the time it looked simply like a very bad business decision. However, reviewing the facts today and the VC firms involved in this debacle, it provides an interesting insight to how these two VC firms may have been dealing with inside information and unfair advantages with regards to the common stockholders.
Centrality’s major investor was Walden International, controlled by Silicon Valley financier Lip-bu Tan. On the Sirf Board of Directors was a principle representing New Enterprises Associate (NEA). Both have the largest China investment venture funds of the top 5 Silicon Valley VC firms, Northern Light and Sina.
In hind sight, the technology of Centrality was going obsolete. The major investors in Centrality knew this and recognized that the potential for a successful IPO had passed. The problem then was: how to extract the investors capital in this soon to be obsolete company.
The solution seems to be clear today: To sell the company to a public company and for a enough cash that would return the VC capital and perhaps a large profit at the same time for the investors. Getting the cash was the key to the whole deal because they knew that the technology was going obsolete.
NEA principles were on the Board of Directors of SiRF. SiRF purchased Centrality for about $283 million dollars in July 2007. About $100 million of this was in cash, representing at the time a substantial percentage of SiRF assets. This was what was needed to extract Walden International and other smaller VC’s cash investments and provide a excellent return to the investors in Walden International. Walden and NEA both knew that this technology and the company itself was becoming obsolete. Centrality’s acquisition resulted in the complete collapse of SiRF.
However the transaction viewed as a single separate event may be dismissed as just a stroke of very bad luck. Until you know about a new start up company called Telegent Systems and the most recent rumor coming out of China that Spreadtrum (NasDAQ:SPRD) is currently in the process of buying Telegent Systems.
Until May 2010, Telegent was a high flying semiconductor company with a single successful chip that allowed cell phones to receive analogue television reception. The company reported revenues of over $100 million and was planning a significant IPO for approximately $280 million, as reported in the documents filed with the SEC in January 2010. Until things started to fall apart. Telegent would eventually claim that economic conditions were not right for them to go public at that time and the IPO was cancelled around March 2010.
In reality information derived from sources in China, the fad for Telegent’s chip and technology was disappearing, lack of internal controls in the china operation lead to significant disclosure issues and the introduction of the first competitiors resulted in the cancellation of the IPO and significant drop in Revenue and margins. A major layoff occurred in July of 2010 and a new CEO was hired to restructure the company, albeit for the purpose of a sale.
The investors in this company with almost all of the cash infusion ( approx $25 million ea.) is from Walden International and NEA. The CFO from SiRF was also brought in as the CFO of Telegent. Telegent’s Chairman of the board is Lip-Bu Tan.
It appears that we see the same situation with Telegent that existed with Centrality. Only this time both Walden and NEA have the problem of extracting the investors money from a company whose technology is obsolete. The people we have spoken to indicate that the analog technology is well over three years old and the revenues in Telegent are substantially lower than what was published in the initial S-1 filings and are in fact in the red. This is substantiated through discussions with individuals in China.
Telegent needs an angel similar to what SiRF was for Centrality. Coincidentally NEA has a significant control over Spreadtrum. An NEA principle is on the Board of Directors and NEA was a significant investor in SPRD.
We have heard and believe that Spreadtrum is going to purchase Telegent systems. Most likely in a similar deal as Centrality and SiRF. Freeing up the cash that NEA and Walden have invested in Telegent along with a nice return for NEA and Walden investors. All to the detriment of Spreadtrum investors holding ADR shares.
We do not believe that this transaction is in the best interest of the individuals and institutions that hold ADR stock shares in Spreadtrum. In fact, with NEA involvement including influence on Spreadtrum’s board of directors and the fact that they each have approximately $25 million invested in Telegent we believe that this deal because of the relationship of the two VC firms efforts to free up this investment and should not be allowed to occur. Both firms know that the technology and the business of Telegent Systems is obsolete.
This scenario appears to be the process that Walden and NEA are using to extract investor money from business investments that do not blossom into successful IPO’s. They find a public company and extract the cash and a profit while the holders of common in the public company are left with a severely damaged public company. As a result, Walden and NEA are able to almost guarantee their investors almost no risk.
Factual Data - Telegent acquired by Spreadtrum – Significant similarities with Sirf acquiring Centrality in 2007: Same investors, same playbook. Sirf crashed in 2008. A cautionary tale for Spreadtrum common stockholders ?
· December 2009 – Telegent files for $250m IPO
http://venturebeat.com/2009/11/24/telegent-files-for-ipo-as-public-market-thaws-even-more/
· May 2010 – Telegent discretely withdraws IPO
· June 2011 – Telegent acquired by Spreadtrum
1. Spreadtrum and Telegent share the same board member, Scott Sandell from NEA
2. Spreadtrum is a major customer of Cadence Design Systems
3. Cadence CEO Lip-Bu Tan is chairman of the board of Telegent
4. Venture Capitalist Lip-Bu Tan is a major investor of Telegent via Walden International’s China fund Sina
5. NEA is a major investor of Telegent and Spreadtrum via Northern Light, NEA’s $100m+ China fund
6. Cadence CFO Geoff Ribar was CFO of Telegent until October 2010
· Estimated cash on hand for Telegent: $100m (Down from $150m in June 2010)
· Telegent technology assessment: obsolete, no new product pipeline, Analog Mobile TV designed out at most China OEM/ODM/IDHs
Similarities with SiRF acquires Centrality in 2007
· 2007: SiRF acquires Lip-Bu Tan-controlled Centrality for $280 million, SiRF stock price at $22
· SiRF VC investors are Walden (Lip-Bu Tan) and NEA (Scott Sandell)
· 2008: After SIRF CFO Ribar announces 98% revenue drop SiRF stock plunges to $7
Most notable was the impairment charges after the acquisition: Essentially Centrality was written off for goodwill of $216m plus another $43m in asset write downs right after the acquisition.
The Centrality acquisition constituted a large cash gift to Financier Lip-Bu Tan.
Meanwhile, investors saw the SiRF stock price go from $36.15/share to $0.94/share under SiRF CFO Ribar’s and BOD chairman Lip-Bu Tan watch.
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